Rises and falls

And the Brexit winner is: Frankfurt

brexit, frankfurt, cfa institute
Tarnished image. Source: Imago

Surveys on the effects of Brexit usually ask Britons or other European Union citizens for their opinions. But what if the scope is expanded to the four corners of the earth? The CFA Institute, a global professional association of investment managers, took this novel approach in a recent poll.

Gary Baker, boss of CFA’s European operations, told Handelsblatt that 85 percent of respondents see Frankfurt as the big municipal winner from Brexit. A mere 7 percent saw London as coming out ahead after the UK’s exit transition through the end of 2020. The survey, which was conducted in the first half of February, was based on 974 responses.

The outcome compares with a study by S&P Global Market Intelligence, which sees Germany, Ireland and Luxembourg as the main beneficiaries of Brexit. According to S&P, some 14 large banks and financial companies including Goldman Sachs, JP Morgan, Daiwa Securities and Citigroup want to expand their presence in Germany.

“Some 85 percent of respondents see Frankfurt as the big municipal winner from Brexit. ”

Gary Baker, Europe head of CFA Institute

By comparison, 14 finance companies also plan to expand in Dublin and 12 in Luxembourg. According to a recent Reuters survey of 119 financial firms, 5,000 jobs will be withdrawn from the British capital due to Brexit.

The UK, meanwhile, is worried that London will lose its allure for talented financial professionals. Nearly two-thirds of British respondents in the CFA survey fear UK financial firms will have more trouble recruiting top managers. And many brokers assume it will be more difficult to earn money in London. Some 80 percent of global investment managers expect Brexit will have a negative impact on returns on investment through UK financial firms, Mr. Baker said.

Opinions varied on the related impact on Europe: 36 percent anticipate lower returns from Brexit, while 35 percent expect earnings will rise. In the midst of this development, the rising cost of meeting new EU financial regulations such as Mifid II will speed consolidation in the sector, Mr. Baker added.

Peter Köhler covers banks, private equity, venture capital and corporate financing for Handelsblatt in Frankfurt. Jeremy Gray, an editor for Handelsblatt Global, adapted this story into English. To contact the author: koehler@handelsblatt.com

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